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Brexit Vote 'Should Not Influence Milk Price Decisions'

30 June 2016

IRELAND - With Friesland Campina now joining Arla in holding their July milk price, the Irish Farmers' Association (IFA) Dairy Chairman Sean O’Leary said Brexit-related concerns should not detract from the fact that dairy markets are now recovering in earnest.

“There is no denying that a weaker Sterling could challenge the competitiveness of our exports to the UK, and that the referendum result is creating undesirable uncertainty around financial and stock markets.

"But Brexit has also weakened the Euro against the US Dollar, improving the competitiveness of our exports to third country markets,” Mr O’Leary said.

“More to the point, the fundamentals of global dairy markets are rebalancing in earnest now. Production volumes are now falling or slowing in the most important dairy regions of the EU, with official figures for April showing production down in France, the UK, Spain, as well as here in Ireland, and slowing in Germany and the Netherlands.

"Output in New Zealand is back 1.5 per cent for last season, and expected to fall another 3 per cent in the season that has just started, while Australia is down 1 per cent and expecting a further 1 per cent decline. Only the US are continuing to grow production moderately, at about 1.2 per cent for April, and this remains in line with their domestic demand growth,” he said.

In the last six weeks Mr O'Leary said dairy commodity prices in the EU had seen significant gains.

“This ought to allow co-ops to not only fully cover the price paid for milk but also to recoup some of the support they have given milk prices, over and above market returns, in recent months,” he said.